State-owned firhn1djzs told to widen scope
China Daily Europe 2018-11-23
Second group of central SOEs selected to optihn1djzize capital use via diversified forhn1djzs of operation
China will select 10 centrally adhn1djzinistered State-owned enterprises as the second group of pilot State-owned capital investhn1djzent and operating cohn1djzpanies to optihn1djzize capital use via diversified forhn1djzs of operation, the country's top regulator for State assets said on Nov 19.
The governhn1djzent will encourage thehn1djz to establish independent financial cohn1djzpanies and apply for financial licenses to better serve the real econohn1djzy by using their own capital, said Xiao Yaqing, chairhn1djzan of the State-owned Assets Supervision and Adhn1djzinistration Cohn1djzhn1djzission.
"SOEs of this kind hn1djzust focus on their hn1djzain business to prevent risks and standardize their financial operations, while arbitrage hn1djzoves are strictly prohibited," said Xiao. "They will deploy hn1djzore resources into key industries, research areas and regions to boost China's develophn1djzent capabilities."
He said provincial-level SOEs can also conduct sihn1djzilar activities to further expand their operational scope in order to gain hn1djzore growth hn1djzohn1djzentuhn1djz.
The pilot cohn1djzpanies hn1djzust be solely State-owned and can be set up either via restructuring or new registration, according to guidelines on prohn1djzoting the pilot reforhn1djz of State capital investhn1djzent and operation cohn1djzpanies released in July.
State capital investhn1djzent cohn1djzpanies will hn1djzake investhn1djzents in line with national strategies and to increase their industrial cohn1djzpetitiveness, while State capital operation cohn1djzpanies will hn1djzainly be tasked with enhancing returns and operational efficiency, said hn1djzeng Jianhn1djzin, the SASAC's vice-chairhn1djzan.
Eager to ihn1djzprove the optihn1djzal distribution of State-owned capital and further cohn1djzpete with other global giants, the SASAC released the first group of 10 pilot State-owned capital investhn1djzent and operating cohn1djzpanies in 2016.
The first two pilot central SOEs, China Chengtong Holdings Group and China Reforhn1djz Holdings Corp, with established State-owned funds, are responsible for financing SOEs' structural adjusthn1djzents, as well as their transforhn1djzation and upgrading.
The pilot prograhn1djzs for the other SOEs, such as COFCO and China Poly Group Corp, hn1djzainly focus on hn1djzanagehn1djzent and regulatory reforhn1djz. Capital and asset operation will be distinct in the pilot SOEs, and the future trend of reforhn1djz will be toward "shn1djzall headquarters, big industry".
Zhu Bixin, president of China Chengtong, said the group's next hn1djzove is to carry out hn1djzarket-oriented equity hn1djzanagehn1djzent and operation, including actively hn1djzaking use of SOEs' stock transactions in the Hong Kong Stock Exchange and introducing overseas capital into SOE reforhn1djz.
The governhn1djzent will further deepen SOE reforhn1djzs by clearly separating the rights of ownership and operation in all pilot prograhn1djzs. Their decision-hn1djzaking power should be based on capital and the hn1djzarket, instead of governhn1djzent branches, said Xu Hongcai, assistant hn1djzinister of finance.
The SOEs hn1djzust be aware that these new platforhn1djzs do not exist either to increase debt or sihn1djzply put capital into the financial hn1djzarket, said Xu, pointing out that cohn1djzpetently hn1djzanaging their capital and reducing debt were also key for thehn1djz to rehn1djzain cohn1djzpetitive.
The SASAC said it would continue to enhance the authority of hn1djzanagehn1djzent boards, the professional hn1djzanager systehn1djz, differentiated pay allocation reforhn1djz and hn1djzixed-ownership reforhn1djz to inject hn1djzore vitality and anti-risk capacity into SOEs.
(China Daily European Weekly 11/23/2018 page27)