Coal hub plans pricing, ownership reforms

The coal hub in North China's Shanxi province is planning new reforms this year, following the central government's pledge to let the market play a decisive role in allocating resources, senior officials said.

"The most important thing is to deepen reform in coal sectors, including advancing price marketization, stepping up reforms of State-owned enterprises and transforming government functions to streamline investment approvals," said provincial Party Chief Yuan Chunqing.

Shanxi is a leading energy base in China, responsible for one-quarter of the country's coal reserves and annual output. But the coal industry in the province last year was under pressure as price drops in the fossil fuel took more than 200 billion yuan ($33 billion) away from the businesses' revenue, Yuan said.

In late 2010, the central government allowed the province to set up a trial zone for exploring economic restructuring in the resource-intensive region.

The trial focused on industrial diversification, ecological restoration, the balancing of urban and rural development and improving people's well-being, Yuan noted.

"Shanxi's coal inventory stood at 267.4 billion tons at the end of 2012, of which 122.8 billion tons have been allocated, mainly through government assignment, with profits of about 1.3 yuan ($0.21) per ton," Yuan said.

"The cheap cost of coal led to over-reliance by some enterprises. Coal is our major resource, but we must make the market play a bigger role in marketization," he said.

In the Government Work Report he presented March 5, Premier Li Keqiang echoed a November pledge by the central government to let in more market forces, saying the country will reform the pricing of resource products.

Yuan added that the provincial government also plans to step up reforms of State-owned enterprises, letting in more public-private ownership. The province has the fifth-largest number of SOEs in China, with total assets of more than 1.3 trillion yuan.

"A reduction of 20 percent ownership from the State-owned enterprises will bring the government an income of about 70 billion yuan, which can be used for improving livelihoods" in the region, Yuan said.

"What's more, the provincial government also will accelerate the transformation of government functions, streamline investment approvals and reduce the time needed for the approvals. Meanwhile, the government will strengthen market supervision to create a more level playing field," he added.

Li Xiaobo, chairman of Taiyuan Iron and Steel Corp, said the promotion of mixed ownership in the SOEs will help rejuvenate these businesses. He also called for reforms of the internal management of the enterprises.

Liu Jianzhong, chairman of the Shanxi Coal Transportation and Sales Group Co Ltd, said achieving the goal of mixed ownership lies in the establishment of a modern corporate structure and governance, as well as an internal risk management system and motivation mechanisms.