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SOEs will sink or swim

2013-03-14 08:01 Global Times     Web Editor: qindexing comment

China's State-owned assets supervisor is planning guidelines for the reform of State-owned enterprises (SOEs), which could be launched in the first half of this year, a source close to the supervision administration was quoted by a newspaper affiliated with the Xinhua News Agency as saying Wednesday.

"The State-owned Assets Supervision and Administration Commission of the State Council (SASAC) has set up a working group to study the target, specific tasks and timeline of the reform," according to a source from SASAC as reported by the Economic Information Daily.

One of the major tasks of the reform is to classify the types of SOEs according to their main functions, the source said, without disclosing more details.

Calls to SASAC were not returned by press time Wednesday.

"Except for enterprises in the sectors related to State security, more and more SOEs have been operating in a market-oriented model after rounds of reforms," Lu Dongbin, a professor at the School of Business at Renmin University of China, told the Global Times Wednesday.

"The government should reduce administrative control of SOEs in sectors where it's possible for all enterprises to participate," Zhang Zhengjun, a researcher at the State Council's Development Research Center, told the Global Times Wednesday.

Zhang also suggested setting up a new leadership selection mechanism for SOEs that is different from that of the government administration.

"In consideration of the different responsibilities and functions of SOEs, the supervisor needs to take different supervision measures," Chen Xuyuan, chairman of Shanghai International Port (Group) Co and member of the National Committee of the Chinese People's Political Consultative Conference, was quoted as saying by the Beijing-based newspaper.

According to the report, the SASAC­ source said that issuing the document "at the current critical period is very helpful."

With the development of the reforms, more and more SOEs will become wholly market-oriented enterprises, and "if they don't operate well, they will go bankrupt, and the government will not save them," said Shao Ning, deputy director of SASAC, as quoted by the report.

In the history of China's SOE development, "reforms have always been ongoing, with obvious progress having been made, but have also met obstacles including opposition from interest groups with strong political backing," Lu said.

The reforms have also created certain challenges.

In 1990s, a large number of workers lost their jobs due to SOE reforms which included letting some poorly managed enterprises go bankrupt, though the exact job-loss figure was never released.

The Financial Times reported last November that the number may have been as high as 50 million.

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