Experts advocate mixed-ownership

A mixed-ownership structure is a necessary step in reforms to further boost the vitality of China's State-owned enterprises (SOEs), according to participants of an industrial summit held on Monday in Nanning, capital of South China's Guangxi Zhuang Autonomous Region.

China decided in November 2013 to allow more non-State-owned capital into the market in order to enhance the -mixed-ownership in the economy.

"Progress has been made across China, and while the central government is still devising detailed policies concerning the reform on mixed-ownership, 2014 would be an important year, " Liu Yuting, director-general of the enterprise department with the -Ministry of Finance (MOF), told the Global Times on Monday.

Liu also said the mixed-ownership will take place at the production and operation level.

"The ultimate motivation for mixed-ownership is profit. This notion could arouse people's interest because they want to make more profit out of it, not because they want to fix some of the problems this country have," Ma Zhengwu, chairman of the China Chengtong Holdings Group, an asset management company under the State-owned Assets Supervision and Administration Commission, said at the summit.

The leaders of the SOEs welcome such an effort, and non-State-owned capital should also be interested in mixed-ownership out of the need for asset appreciation once they have accumulated enough wealth, Ma said.

"Whether mixed-ownership could serve as a growth engine for the Chinese economy depends on whether the decisive role is played by the market or the government after the restructuring. If the market has an upper hand, then we could see the benefits from the system," said Feng Lun, chairman of real estate company Vantone Group.

"SOEs have a need to improve their efficiency and optimize their structure through implementing mixed--ownership. In my opinion, a truly mixed-ownership between private and State capital should be like boiling coffee in water - the two are really fused with each other after the mix," Liu from the MOF said.

There are also aspects that need to be considered during the reform of mixed-ownership, experts said.

"The mixed-ownership reform should be implemented under the principle of equality between non-State-owned and State-owned capital in terms of shares, shareholder rights, division of interests and sharing of responsibilities. For instance, top management personnel should be given shares in proportionate to their expertise," Guan Yueqing, director of the State-owned Assets Supervision and Administration Commission of Guangxi, noted at the seminar.

"Once a public company is listed, financial analysts tend to have a very short view on the situation of the company, making it very difficult for the company management to announce projects that need large investment," Hervé Machenaud, president of the Asia--Pacific zone French electric utility -giant EDF Group, said at the seminar.

The management must balance the constraints of the financial markets and the long-term interests of the public company, Machenaud said.

Originally a State-owned corporation, the French government partially floated shares of the company on the Paris Stock Exchange in 2005.