Lack of detail, measures slow progress of mixed-ownership scheme
The first batch of mixed-ownership pilot programs for the country's vast State-owned enterprises (SOEs) might soon be launched, with SOEs in the country's traditional industrial base in Northeast China expected to become a focal point, according to media reports Tuesday.
The pilot programs, part of the country's far-reaching SOE reform plan, would be a significant step forward, as the government strives for "substantial results" in implementing a blueprint that has basically been painted, the Shanghai Securities News reported.
Due to the lack of a detailed plan, progress has been slow since the mixed-ownership model allows private investors in SOEs, in a bid to cut troubling bureaucracies and improve effectiveness, analysts said Tuesday, noting feasible measures are needed.
Relevant government agencies have met to prepare for the launch of the pilot programs for central government-administered SOEs in the near future, and provincial governments would follow by selecting three to five local SOEs to participate, the newspapers said.
The pilot programs will be focused on SOEs in key sectors including electricity, oil and gas, railways, aviation and telecommunications. The Northeast China region, with its relatively heavy presence of State-own businesses, is likely to become a focal point for the reform plan, according to the report.
"There is a relatively heavier presence of State-owned businesses in the northeast, where existing problems are particularly acute, more historical issues remain, structural reforms are not in place, and which are all major reasons for economic instability," an unnamed official at the National Development and Reform Commission (NDRC), the country's top economic planning body, told the Shanghai Securities News.
Sketchy details
The focus on the northeast region shows the country's determination to revitalize the region's troubled old industrial base and to address systematic issues in SOEs through reforms, said Zhang Wanqiang, director of the Institute of Economics under the Liaoning Academy of Social Sciences.
"The reforms are necessary in the northeast because SOEs there still face many structural problems," Zhang told the Global Times Tuesday.
But these problems are temporary and can be addressed through reforms and with the participation of private investors, Zhang said.
Feng Liguo, an expert at the Beijing-based China Enterprise Confederation, also said private investor participation could inject life into these SOEs by establishing a balanced and streamlined board and management structure to improve effectiveness.
"The reforms will turn these SOEs from bureaucracies to market-oriented companies, assigning clearer responsibilities, focusing on generating revenue and providing better services," Feng told the Global Times Tuesday.
And though they are struggling, SOEs and the potential for more sectors attract private investors, but they might be reluctant to dive in without seeing a clear plan as to how the reforms would be carried out.
Though there has been much discussion of SOEs reforms and the mixed-ownership model since its introduction in 2013, actual progress has been slow due to sketchy details, analysts said.
Feng said that the mixed-ownership reforms are failing to make headway because there is no uniform and detailed plan as to how the reforms will improve SOEs while preventing a potential loss of key sectors.
An NDRC official told the Shanghai Securities News that market tools will be fully applied, and measures based on different locations, sectors and companies are part of the reforms, but offered no details.
Yu Fei, deputy director of the Liaoning Provincial Development and Reform Commission, told the Global Times that the NDRC provided the direction for the mixed-ownership reforms in Northeast China at a symposium in May, but provided no details.
The NDRC has not responded to questions the Global Times sent to it on Tuesday. The State-owned Assets Supervision and Administration Commission said Tuesday that it has not been informed of the plan.
