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BEIJING, Sept. 15 (Xinhuanet) -- Now for more on the reform, my colleague Jin Yingqiao joins me in the studio.
Q1. The guideline says the government will consolidate and clean up certain SOEs, saying "decisive results" are expected by 2020. Give us the key points of the reform package.
A1. Right, Chinese SOEs enjoyed a dominant position in the market with huge resources, including easier access to loans, and more favorable policies like subsidies. But a lot of them lack innovation and less resilient in the face of an economic slowdown. To change that, a key highlight is on "mixed ownership".
The government will not force the issue, but private investors will be encouraged to buy stakes in state firms, and more state firms will be encouraged to restructure to pave the way for stock listings. Oil and gas, electricity, railways and telecommunications were identified as sectors that could be suitable for limited non-state investment.
In terms of business administration, a market-based salary system will be established. SOEs will hire more professional managers, while boards of directors will have greater decision-making powers. Supervision will be intensified to prevent corruption. SOEs will also be divided into two categories: commercial and public goods and services. The two categories will be evaluated differently.
Q2. And give us a bigger picture of China's SOEs. Are they truly pillars of China's economy?
A2. The quick answer is yes, they are pillars in some strategically important sectors like banking and energy. Over 100 of them report directly to the central government and are managed under the State-owned Assets Supervision and Administration Commission. They are usually big market players like PetroChina, StateGrid and China Mobile.
Then there are those owned by local governments. They vary in size.Although in 2013 they only accounted for 1.1 percent of all companies, they are mammoths in terms of size. On this year's China Top 500 Enterprises list, revenues by SOEs account for almost 80 percent. In terms of tax contributions, nearly 90 percent.
On the 2014 Fortune Global 500 list, there are 100 Chinese companies. 92 of them are state-owned. But compared to private firms, state firms don't do well in terms of profits: in 2013, their profit rates were below 30 percent, while private companies saw between 70 to 80 percent. State firms also lag behind in number of patents, technical innovation, and new products.
(Source: CNTV.cn)
