Official rebukes criticism of SOE dominance

The number of China's State-owned enterprises (SOEs) is in line with the development of the nation's market economy, a senior official said during the ongoing 18th Party congress, while pledging to deepen SOE reform.

In response to questioning over the large number of Chinese SOEs, Wang Yong, director of the State-owned Assets Supervision and Administration Commission of the State Council, said the proportion of SOEs is determined by China's Constitution and the demands of reform and development, People's Daily Online reported Sunday.

While sharing his opinions on the report delivered by General Secretary of the CPC Central Committee Hu Jintao during the opening of the 18th Party congress, Wang said that in both China and developed countries, different types of enterprises exist at different times and stages of social development and the proportions keep adjusting accordingly.

Wang claimed that Chinese SOEs "compete fairly" with other enterprises.

During his report, Hu said the country should make sure all businesses, private and State-owned alike, have equal access to production, retain a fair chance to compete in the market and are equally protected by the law.

By the end of 2011, the country had 144,700 State-owned or State-controlled enterprises, excluding financial institutions, with total assets worth of 85.37 trillion yuan ($13.55 trillion), the Xinhua News Agency reported.

In 2011, these enterprises reported revenue of 39.25 trillion yuan, accounting for 35 percent of total industrial and business revenue, and profits of 2.58 trillion yuan, accounting for 43 percent of the total.

Wang also said that SOEs face further reform, as mandated by the report, which said the vitality, dominance and influence of the State-owned economy should be strengthened through reform.

He admitted that reform in some sectors has lagged behind.

"Market-oriented reform requires breaking down the SOE monopolies, especially in competitive sectors such as the petroleum industry, and allowing more private businesses to compete," Zhou Hongchun, a researcher with the Development Research Center of the State Council, told the Global Times Monday.

"A large number of SOEs does not necessarily mean they are competitive in the market," said Zhou, explaining that problems still exist, such as the loss of State-owned assets when SOEs transform into corporations.

While delivering a report on SOE reform at the bi-monthly session of the Standing Committee of the National People's Congress, Wang said many SOEs are inclined to expand business or increase revenues instead of cracking the hard nut of reform and improving efficiency.