THE framework for China’s state-owned enterprises is “basically complete” following five years of aggressive restructuring, the top administrator for the state assets said yesterday.
The country is trying to streamline and modernize its bloated and debt-ridden state-owned sector and create conglomerates capable of competing globally.
The reforms have involved the restructuring of SOEs through reorganizations and mergers, reductions in excess capacity and the relocation of workers, though some analysts say much more needs to be done, especially to address high debt levels.
“The intensity of the central enterprises’ reorganization has been unprecedented,” Xiao Yaqing, chairman of the State-owned Assets Supervision and Administration Commission, said at a media briefing in Beijing.
The government has ordered a series of mergers between central government-controlled conglomerates over the five-year period, cutting them to 98 from 117 under the control of SASAC.
“We won’t use the increase or decrease in the number of conglomerates or the size of firms to influence our targets” in restructuring of SOEs, Xiao said.
“In the coming five years, we’ll focus more on boosting competitiveness and increasing quality of management of SOEs, especially in preserving and increasing value of state assets.”
China has also advanced “mixed ownership,” basically allowing non-state enterprises and some foreign investors to take stakes in state-owned firms.
SASAC said that at the end of last year, 68.9 percent of central SOEs and subsidiaries had adopted “mixed ownership.”
Nineteen central SOE groups in the power, petroleum, natural gas, railway, airlines, telecommunications sectors, and the military have been identified to carry trials in mixed ownership.
With government reform and restructuring efforts gradually paying off, centrally administered SOEs have been increasingly efficient and competitive over the last five years.
Central SOEs saw the strongest-ever growth both in revenue and profits for the January-August period, with a 15.7 percent increase in business revenue and a 17.3 percent rise in total profit, Xiao said.
“By the end of 2016, total assets of China’s central SOEs reached 50.5 trillion yuan (US$7.6 trillion), an 80 percent jump from the end of 2011,” Xiao said.
Under the government’s supply-side structural reform, central SOEs have also made much progress in excess capacity cuts and leverage control.
Xiao revealed that by the end of August, the average debt-to-asset ratio of central SOEs dropped to 66.5 percent, 0.2 percentage points lower than the beginning of this year.
He also said SASAC was working to eliminate overcapacity and shut zombie firms, with 4,977 SOE units closing last year and involving the reallocation of 307,000 workers.
“From January to August, China’s central SOEs beat government-set targets by reducing 16.14 million tons of steel capacity and 55.1 million tons of coal capacity,” Xiao said.
China launched a “rejuvenate the northeast” campaign in 2003 to provide new forms of growth for the industrial region, once the mainstay of the country’s economy.
Xiao said he has seen positive changes taking place in state-owned firms in the northeast.
China’s Cabinet said on Wednesday that more work should be done to advance the restructuring of central SOEs, especially in equipment manufacturing, coal, electricity, communications and chemical industries.
Since 2013, over 30 central SOEs have been restructured.