Expert says reforms bring market-oriented economy a step closer
A senior official said Monday that the latest reforms on China's State-owned enterprises (SOEs) will be carried out "under the sun," and the government will disclose as much information as possible to prevent only a few from benefitting from the reforms.
The policies, plans, measures and procedures of this round of SOE reforms will be publicized as much as possible, Zhang Xiwu, vice chairman of the State-owned Assets Supervision and Administration Commission (SASAC), was cited by media reports as saying at a State Council Information Office press conference.
China manages 112 SOEs through the SASAC.
Officials from the National Development and Reform Commission, the Ministry of Finance, Ministry of Industry and Information Technology and Ministry of Human Resources and Social Security also attended the press conference.
On Sunday, China unveiled a 20-page agenda to further reform its State sector that will affect 150,000 SOEs and 100 trillion yuan ($15.69 trillion) worth of assets.
"Zhang Xiwu's remarks set the tone for the next phase of work for SOEs, to strive to publicize relevant information, and accept the supervision of the shareholders, the citizens," said Zhou Fangsheng, vice director of the China Enterprise Reform and Development Society.
"From a legal point of view, public ownership means citizens are the shareholders of all the SOEs. As a shareholder, the citizen has a right to know. So, information about SOEs, excluding trade secrets, should be published," Zhou told the Global Times Monday.
Disclosure issue
However, SOEs are not as transparent as they should be, Zhou said.
"While listed companies are better at disclosing information, their parent companies and unlisted assets within the group have failed to meet transparency requirements. For example, people are unable to see their financial statements," Zhou said.
The guidelines issued on Sunday said China will split its SOEs into two groups: those that seek commercial interests and those that serve public interests.
"It is hard to give a timetable on the categorization of SOEs. Detailed rules will be drawn according to the spirit of the guidelines. Then the government will identify SOEs and categorize them. The whole process of categorization could take at least three years," Zhou said.
Things can get complicated, as some commercial SOEs also own public assets and vice versa, Zhou explained, saying divestment will be part of the reform process.
Incentives mechanism
At Monday's press conference, Zhang Yizhen, vice minister of the Ministry of Human Resources and Social Security, discussed the compensation package of SOE chiefs.
Zhang said a differentiated salary system will be established, taking into account whether the managers are government-appointed officials or professional executives who underwent a selection process. Zhang also said the reforms will rectify the excessively high wages of SOE chiefs.
"The reforms are a step closer to a market-oriented economy, its key being a mechanism of checks and balances and an incentive system," Xu Hongcai, director of the economic research department of the China Center for International Economic Exchanges, told the Global Times on Monday.
"Since the country needs to develop innovative entrepreneurs and professional managers, incentives such as shareholdings and options are needed. The creation of an incentive system must be carried out under the sun to prevent it from becoming the preserve of some individuals swallowing up State assets," Xu said.
Xu added group listings of commercial SOE listings, which the guidelines encourage, are a good way to boost SOE transparency.
Currently, only subsidiaries of many Chinese SOEs are listed.
