Deepen mixed ownership reform prudently

The mixed ownership reform supported by some State-owned enterprises is only an intermediary step to establish modern enterprise systems in the SOEs. If the reform does not go forward, or if the SOEs do not feel pains, the step becomes meaningless, says an article in 21st Century Business Herald. Excerpts:

The SOEs and local governments are supportive of the mixed ownership reform, which is in sharp contrast with their resistance to earlier SOE reforms.

The real SOE reform should end their monopoly in industries. The SOEs must operate according to market rules and spend more of their earnings serving the public's needs. The government should also abolish its preferential industrial policies and protection for some SOEs to force them to raise their efficiency.

But the mixed ownership reform, which barely affects the SOEs' interests, gives them spacious room and autonomy to transfer some stock rights of some non-important businesses to private investors. This compromise can muffle the public's cries for SOE reform, to some extent, without touching the crucial issues of monopoly, efficiency and revenue distribution.

Some local governments also need to transfer some SOE stock rights to pay impending debts, especially after the central government ordered strengthened regulation and supervision of lucrative land transfers.

The passion of the SOEs and local governments for the reform should be a warning to the central government that the "comfortable" reform may just become another round of reaping fabulous profits from State-owned assets. The last round of enterprise reform in the 1990s resulted in tens of millions of laid-off workers and a huge loss of public wealth.

Therefore, the mixed ownership reform must be carried out prudently and under close supervision.

Compared with the sellers' passion, private investors' calm and hesitation clearly show their concerns that they may lack rights in any cooperation with the powerful partners.

Reform should not be made as a political mission, or as homework assigned by the central government.