China unveils details of state-firm reforms as growth sputters

Sun Sep 13, 2015 11:19am EDT
 
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By Kevin Yao and Lei Wang

BEIJING (Reuters) - China unveiled details on Sunday of how it would restructure its state-owned enterprises (SOEs), including partial privatization, as data pointed to a cooling in the world's second-largest economy.

The guidelines, jointly issued by the Communist Party's Central Committee and the State Council, China's cabinet, included plans to clean up and integrate some state firms, the official Xinhua news agency said. It did not elaborate.

Reform of underperforming state-owned enterprises is one of China's most pressing needs. But if not handled well, the restructuring could lead to hundreds of thousands of people being laid off and social instability.

Xinhua said the plans included introducing "mixed ownership" by bringing in private investment, and "decisive results" were expected by 2020.

The government will not force "mixed ownership", nor will it set a timetable, giving each firm the go-ahead only when conditions are mature, it said.

"This reform will be positive for improving the impetus of the economy and making growth more sustainable," said Xu Hongcai, director of the economic research department at the China Centre for International Economic Exchanges (CCIEE), a Beijing-based think-think.

Partial privatization, he added, would help establish "check-and-balance and incentive systems" at state firms.

China's government manages 111 companies centrally under the State-owned Assets Supervision and Administration Commission, or SASAC. Local governments own and manage around 25,000 state-owned companies and the sector employs nearly 7.5 million people.   Continued...

 
A labourer cuts steel bars at a railway bridge construction site in Lianyungang, Jiangsu province, China, September 12, 2015. REUTERS/China Daily