Chinese SOEs speed up mixed-ownership drive

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Chinese state-owned enterprises (SOEs) are picking up the pace in mixed-ownership reforms, as the country expects private investment to improve competitiveness in the state sector.

More than 40 listed SOEs have announced trading suspensions due to major asset reorganizations on the A-share market, according to information service provider Wind.

"It came after governments stepped up support, and market forces began to play an ever greater role in the process," said Zhao Linghuan, chairman of Hony Capital. The investment fund is backed by Legend Holdings and has participated in the restructuring of 33 SOEs, and remains optimistic about future prospects.

SOEs have great influence in the country's strategic sectors such as defense and energy supply. In the past five years, the government has made concrete efforts in market-oriented reforms.

The number of SOEs supervised by the central government has been reduced to 98 from 117 in the past five years, according to the State-owned Assets Supervision and Administration Commission of the State Council (SASAC). The restructuring has helped these companies save more than 10 billion yuan (1.5 billion US dollars) in operating costs. /CGTN Photo

Telecom giant China Unicom Thursday unveiled plans to sell more shares to investors by private placement after it kicked off a mixed-ownership adjustment in August.

The deal worth around 61.5 billion yuan (nearly 10 billion US dollars) will grant more shares to companies including Alibaba and Tencent, with China Unicom Group still the controlling shareholder.

China will deepen economic and financial reforms and further open its markets to foreign investors as it looks to move from high-speed to high-quality growth, said Chinese President Xi Jinping at the 19th National Congress of the Communist Party of China.

China will push ahead with market-oriented reforms of its foreign exchange rate as well as its financial system, and let the market play a decisive role in the allocation of resources, Xi adding that Chinese government will “clean up rules and practices that hinder a unified market and fair competition, support development of private firms and stimulate vitality of all types of market entities."

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Wind data showed that the majority of trading-suspended listed SOEs were administered by local authorities.

China's first two batches of SOEs to implement ownership reforms were mainly administered by central government, such as China Eastern Air Holding Company and China Southern Power Grid.

Li Jin, deputy head with China Enterprise Reform and Development Society, said more local firms would follow suit.

"More local SOEs will likely be included in the third group of companies to pilot the reform, especially those in monopolized sectors," Li said.

Some local governments have rolled out plans to accelerate SOE reforms, and many more are in the pipeline. Shenzhen plans to start ownership diversification in SOEs in competitive sectors in the next year and ensure basic completion in 2019.

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Analysts suggested policy makers adopt differentiated approaches as every SOE has its own characteristics, saying the reforms would be a long process, and not accomplished at one stroke.

The Ministry of Finance showed combined SOE profits rose 24.9 percent year on year in the first three quarters, quickening from the 21.7 percent expansion seen in the first eight months.

In August, the China Structural Reform Fund led by state-owned capital joined hands with Industrial and Commercial Bank of China Beijing branch and Beijing Wealth Capital to establish a special fund, which aims to invest in mixed-ownership reform and restructuring of central and local government-controlled enterprises.

The reform and restructuring of central SOEs is to boost efficiency and promote supply-side structural reform. Since 2003, the total number of central SOEs has sharply fallen from 196 to 98.

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