China's government made another big move in its commitment to reform by unveiling a guideline on Sunday promising to push state-owned enterprises (SOEs) to become independent market entities.
China will modernize SOEs, enhance management of state assets, promote mixed ownership and prevent the erosion of state assets, according to the guideline released by the Communist Party of China Central Committee and the State Council.
The 20-page reform agenda, which reportedly took over two years to draft, called for a gradual move to mixed ownership, setting a deadline of 2020 for its major targets to be achieved.
The government said it would open projects up to private investment in sectors including telecoms, shipping, securities, banking, oil and gas that have long been highly restricted and dominated by SOEs.
SOEs should attract multiple types of investors and the government will encourage them to go public, according to the guideline. It set no specific timetable.
"This round of SOE reform is more market-oriented, and it is expected to yield big results with relatively little hardship by invigorating the whole economy," said Li Jin, deputy head of the China Enterprise Reform and Development Society, a think-tank managed by the State-owned Assets Supervision and Administration Commission (SASAC).
Critics of Chinese SOEs say their ownership lacks transparency, they benefit from too much government intervention, are inefficient and unresponsive to market conditions.
SOE profits have been declining. According to official figures, SOEs' profits nosedived in July, with the pace of decline picking up dramatically from the first six months of the year.
