Major reforms in pipeline for SOEs

Workers clean a molten steel holder at Dalian Special Steel Co Ltd in Dalian, Liaoning province. [Photo by Liu Debin / For China Daily]

China will complete ownership reforms at more than 100 central government-run enterprises by the end of the year through introducing more private capital to State sectors, Economic Information Daily quoted the State-Owned Asset Supervision and Administration Commission as saying on Monday.

The commission has formulated the schedule for the mixed ownership reform, according to the newspaper run by the Xinhua News Agency. Mixed ownership reform aims at boosting the efficiency of the SOEs.

Mixed ownership reform will be a critical pillar of SOE reform efforts in 2017, according to a statement published at the annual Central Economic Work Conference in mid-December. The electricity, petroleum, natural gas, railways, civil aviation, telecommunications and defense industries will be the focus of the mixed ownership reforms.

"China will take more substantial steps to encourage private investors to participate in the restructuring of SOEs this year," said Li Jin, chief researcher at the China Enterprise Research Institute.

Li said that the mixed ownership reform will be the priority among all measures for SOE reform because it can lead to a market-oriented system.

The National Development and Reform Commission has designated six SOEs directly under central government's supervision, including China Eastern Air Holding Co, China United Network Communications Group Co Ltd and China Southern Power Grid Co Ltd, as pilot programs for mixed ownership reform. So far, four of the reform schemes have been approved.

According to a report from GF Securities Co Ltd in Guangzhou, mixed ownership reform sped up as the central government showed its determination to push through after October by announcing the pilot programs.

The report analyzed opportunities in different industries. For instance, in the power industry, power generation and sales will be more open while distribution will remain within the control of SOEs.

"The government will continue push forward with the reform through trial programs. The basic approach is going to be more aggressive than last year, but prudent in general," said Li.