A technician of China Guodian Corp checks facilities in Lanzhou, capital of Gansu province. (Photo/Xinhua)
Foreign investors invited to buy shares to help raise profits and reduce reliance on the public purse.
The government has pledged to move swiftly to advance the reform and restructuring of State-owned enterprises.
The reform will promote mixed ownership and encourage the inflow of foreign capital to foster more world-class, globally competitive companies.
"China welcomes all types of businesses, including foreign ones, to participate in the ownership reform of SOEs," said Xiao Yaqing, chairman of the State-Owned Assets Supervision and Administration Commission, at a media briefing on the sidelines of the 13th National People's Congress, the top legislative body, on March 10. [Special Coverage]
"We would be delighted to see foreign companies taking part in the mixed-ownership reform. China remains committed to opening up."
Xiao said the diversification of the ownership structure of SOEs is considered a key part of the reform, and emphasized that the rights and interests of all participating investors would be protected.
Since 1998, China has introduced three rounds of mixed-ownership reform－including one focusing on China Unicom－mainly through share issuance, to bring in private investment.
SOEs hold a strategic position in the national economy, so the government will undertake equity diversification at the group level at selected centrally administered companies and explore the release of special rights shares to deepen the reform and bolster State capital.
Xiao said the government will systematically assess the experiences of pilot programs related to the granting of equity stakes to employees in mixed-owned SOEs, in addition to expanding the coverage of the pilots and establishing long-term incentives and restraining procedures.
Li Jin, chief researcher at the China Enterprise Research Institute, said the moves could be mutually beneficial.
"Foreign capital holding shares in SOEs can benefit both sides. With the breakthroughs made in the reform, the country now has conditions that can facilitate the introduction of foreign capital to SOEs," he said.
He added that the moves toward mixed ownership will allow foreign capital to find a larger market and earn higher profits, especially as some SOEs have monopolies in certain sectors.
Wang Chuanlin, an NPC deputy and general manager of China Tiesiju Civil Engineering Group, a State-owned subsidiary of China Railway Engineering Corp, said: "It (reform) will also allow SOEs to deepen their influence on the international market through the use of foreign technologies and overseas sales channels. More important, a growing number of SOEs have started business operations overseas. Cooperation through mixed ownership could help them better explore international markets and become more localized."
He added that the government's next move will be to further promote mixed ownership of SOEs at the local level.
In the past two years, the National Development and Reform Commission and the State-Owned Assets Supervision and Administration Commission have launched two rounds of pilot projects to promote ownership reform. The first round featured nine SOEs, while there were 10 in the second, and they covered areas such as electricity distribution and sales, power equipment, high-speed railways, airline logistics, telecommunications and finance.