China’s central authorities are aiming to further drive their reform of State-owned enterprises (SOEs) with a series of recently-released guidelines to boost growth.
The guidelines present modernization and fiscal policies are designed to improve the management and protection of State assets, ultimately focused on turning SOEs into independent market-driven entities.
“This system would establish a divider between government and market so as to prevent the official State assets supervision organization from directly manipulating State assets of SOEs,” Xu Hongcai, assistant minister of Ministry of Finance, told the People’s Daily in an interview.
“In order to achieve the goal, SOEs must be more market-oriented and have greater ability to avoid risks.”
According to the guideline, more State assets will be used to guarantee and improve the welfare of the public. The government plans to hand over 30 percent of total State assets to public finances by 2020, compared to only 10 percent in 2007.
In addition, more State equity will be directed toward social security funds. “There has been a financial deficit between the funds paid by employees and pensions paid out. In order to cope with this financial pressure in SOEs, State equity may play an important role,” said Xu. (The Daily Mail – People’s Daily news exchange item)