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China Pledges Further Reform of State-dominated Industries
Oct 25,2012 11:31CST
industry news
The Chinese government has vowed to reform state-dominated sectors and grow the market entry of industries such as telecommunications.

BEIJING, Oct. 24 (Xinhua) -- The Chinese government has vowed to reform state-dominated sectors and grow the market entry of industries such as telecommunications, a senior economic official said Wednesday.

The country will stick to reforming its state-owned enterprises and engaging them in the market, said Wang Yong, director of the State-owned Assets Supervision and Administration Commission (SASAC).

He made the comments while delivering a report on state-owned enterprises reform at the bi-monthly session of the Standing Committee of the National People's Congress (NPC), China's top legislature.

The country will speed up the reform of railways, the postal service and salt industry so that companies in these sectors could be peeled off from the role of watchdog and stakeholder, Wang said.

"More efforts will be made to reform industries such as power supply, telecommunications, oil and petrochemical. The market entry into these sectors will be expanded based on the development of these industries," he said.

The government will push for large state-owned enterprises to go public or list their main business if conditions allow, Wang said.

For those who are not fit for listing, the country will encourage them to speed up restructuring. It will also introduce corporate governance into companies solely held by the state, he said.

China has endeavored to reform its bulky state-owned enterprises since it introduced the market economy and opened up in the late 1970s.

So far more than 90 percent of state-owned enterprises have become corporations and some of them restructured to be shareholding companies, according to Wang's report.

About 72 percent of state-owned enterprises under the central administration, mostly large ones in key sectors, have become corporations or shareholding firms, up from 30.4 percent in 2003.

By the end of last year, the country has 144,700 state-owned or state-controlled enterprises, excluding financial institutions, with a total asset worth of 85.37 trillion yuan (13.55 trillion U.S. dollars).

In 2011, these enterprises reported a revenue of 39.25 trillion yuan, accounting for 35 percent of the total industrial and business revenue, and a profit of 2.58 trillion yuan, accounting for 43 percent of the total.


Wang admitted that a number of problems needed to be addressed in the reform of state-owned enterprises.

Several flagship state-owned enterprises have been slow in transforming into corporations and those that have already been restructured still need to improve its corporate governance, especially the management of human resources, he said.

A number of state-owned enterprises fail to respond to the urgent need of reform. They are inclined to expand business or increase revenues instead of cracking the hard nut of reform and improving efficiency, Wang said.

"Reform in some key sectors has relatively lagged behind," he said.

A majority of state-owned enterprises are in traditional industries instead of high-tech and emerging industries and they largely rely on expanding investment to boost growth, he said.

State-owned enterprises in some sectors are not competitive enough and troubled by problems such as negative competition, inefficiency in cost control and pollution, he said.

Also, non-operational cost of state firms remained heavy such as the expenses to sponsor schools, hospitals and communities, pensions and allowances for needy employees.

According to Wang's report, state-owned enterprises under the central administration are sponsoring about 8,000 public institutions, including schools, hospitals and community centers and paying pensions for 5.23 million retired employees.


China's state-dominated sectors

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