A State Grid employee works on an ultra-high-voltage transmission construction in Huainan, Anhui Province. （Photo by Song Weixing/For China Daily）
Pilot projects to deepen mixed-ownership reform in State-owned enterprises will be further expanded this year, particularly in key industries and northeastern regions of the country, China's top SOE regulator said on Thursday.
The government will increase the intensity of reforms in leading commercial SOEs and further explore equity diversification at the centrally-administered SOE level this year, said Peng Huagang, deputy secretary-general and spokesman of the State-owned Assets Supervision and Administration Commission.
The number of State capital investment and operation companies had been expanded to 21 in centrally-administered SOEs, or central SOEs, last month, 11 more from 2018, including China National Building Material Group Co and China Resources (Holdings) Co. Nineteen of them are investment companies, he said at a news conference in Beijing.
"This move is not only critical for reform of the State-owned assets management system, but also related to the next step on how we change from the 'management of companies' to the 'management of capital'," said Peng. "We will further promote the adjustment of the distribution structure of State-owned economy through these platforms."
To tackle some SOEs' structural, operational and debt issues, China has been spurring SOEs' earning ability via a series of reforms, moving toward mixed-ownership and market-oriented management. The country has also launched a series of reforms, including changing shareholding structure in SOEs and cutting the number of "zombie companies".
'Zombie companies' are economically unviable businesses, usually in industries with severe overcapacity, kept alive only with aid from the government and banks.
The SASAC said that more than 1,900 "zombie companies" have been removed from the country's SOE system so far and the government will continue to cut the number of unprofitable SOEs and help selected ones seek new growth points and expand market channels.
Peng added that the plan to transfer part of State-owned capital to fortify social security funds was implemented steadily. The equity transfer of 18 central SOEs was completed, with transfer scale reaching 75 billion yuan ($11.08 billion).
Zhu Bixin, president of China Chengtong Holdings Group, a State-owned investment and asset-operating company, said the group's next move is to carry out market-oriented equity management and operation, including actively making use of SOEs' stock transactions on the Hong Kong bourse and introducing overseas capital into SOE reform.
"Capital management at the core shows that the government's supervision over central SOEs has risen to a higher level," said Li Jin, chief researcher at the China Enterprise Research Institute.
"It also indicates the SOE operation has become more marketized and they are getting closer to the capital market with professional teams. The transformation will also enhance the vitality and liquidity of State-owned capital."
The sales revenue and profits of 96 central SOEs reached 29.1 trillion yuan and 1.7 trillion yuan, respectively, in 2018, up 10.1 percent and 16.7 percent year-on-year.
Meanwhile, the debt-to-asset ratio of China's central SOEs stood at 65.7 percent, 0.6 percentage point down from a year earlier.
The SASAC said it will also encourage independent innovation and breakthroughs in key technologies, as well as promote the transformation and development of the manufacturing sector.