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Press conference on reform and development of state-owned assets and state-owned enterprises in the new era

0 Comment(s)Print E-mail China.org.cn, June 21, 2022
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CCTV:

The reform of SOEs is an important part of economic structural reform. Since the 18th CPC National Congress, especially after the release of the guideline on deepening reforms of SOEs and its related documents and the implementation of the three-year action plan, China has pushed forward the reform of SOEs into a new phase. What are the major achievements and breakthroughs we have made over the past decade? Thank you.

Weng Jieming:

Thank you for your question. The reform of SOEs has drawn much attention from all parties. In the past 10 years, especially after implementing the three-year action plan, we have effectively removed several institutional barriers and solved many tough problems that were long on the agenda. We have conducted thorough and systematic restructuring in many important sectors and key processes. As a result, a number of new modern SOEs with more vitality and dynamism are thriving. The achievements are as follows.

First, we have built a more sophisticated modern corporate structure of SOEs with Chinese characteristics and a system of state capital regulation. The reform to convert SOEs into standard companies has been completed, which has clarified the responsibilities of the government and SOEs both in legal and institutional terms. SOEs have thus become independent market entities. Party leadership and corporate governance have been integrated. Party leadership has been written into the agenda of SOEs. A majority of the SOEs have formulated a major management list that needs its Party committee in the company to provide contributions before decisions are made. Basically, all SOEs have set up their board of directors, with a majority of members being outside directors. A governance mechanism featuring statutorily-defined and transparent rights and responsibilities, coordinated operations, and effective checks and balances inside SOEs are taking shape. The system of state capital regulation is becoming more established. It unifies the responsibilities of the investors, the assets supervision, and Party building to ensure that state-owned assets are soundly managed while Party building progresses, the investors fulfill their responsibilities while the state-owned assets are being supervised, and intra-Party supervision and the supervision from its investors go hand in hand. It gives full play to the advantages of professional, systematic, and legal supervision, creating a "three-in-one" investor supervision closed loop that highlights supervision of the business and accountability. We will build a national state-owned assets supervision pattern so that each party can perform all of their duties efficiently.

Second, we have made visible progress in improving and restructuring the state-owned economy. The state-owned sector should focus mainly on helping to ensure strategic security, promote industry leadership, bolster the national economy, raise people's living standards, improve public services, and other functions. We have restructured or merged 47 central SOEs and founded or took over nine, reducing the number of central SOEs from 117 to 97. Over 70% of the income from the fields that I just mentioned is generated from central SOEs. Central SOEs are cutting their size to be more competitive by disposing of disadvantaged or non-core businesses and less efficient properties. We have completed addressing "zombie enterprises" and helped improve those enterprises in particular difficulty. We have established a long-term downsizing mechanism for SOEs, which has helped cut company numbers by 38.3% and condensed the management levels to no more than five. We have relieved enterprises of their obligation to operate social programs and solved their longstanding problems in this regard. The duties of managing over 20,000 public service facilities, as well as the obligation to provide water, electricity, heating, gas, and property management services for 15 million employees' homes, have been relieved from SOEs. Over 20 million retirees from SOEs are basically under socialized management. These efforts have effectively solved longstanding problems caused by blurred boundaries between the government and SOEs.

Third, we have made visible progress in increasing the vitality and efficiency of SOEs. The reform of labor, personnel, and distribution in SOEs has broken new ground. We have launched the tenure and contract-based management among managers, introduced the policy of open recruitment, competition for positions, and the termination of uncompetitive employees, and improved the distribution system based on performance and contributions. Moreover, we have widely adopted the medium- to long-term incentive policies. The mixed-ownership system reform has promoted the transition to better business models. Since 2013, the reorganization and reform of SOEs have financed over 2.5 trillion yuan from various types of nongovernmental capital. The number of central SOEs and local SOEs under mixed ownership accounted for over 70% and 54% of the total, respectively. Many SOEs sought new changes through mixed-ownership reform and improved their corporate governance and operations, which greatly improved their vitality and efficiency.

The above-mentioned aspects are both the original target and the achievements of SOE reform. They have laid a solid foundation for SOEs to better play a significant role in serving major national strategies and socioeconomic development and to address the unbalanced and insufficient development of SOEs.

What's worth mentioning is that the Party leadership and Party building have also been strengthened during the reform process. State-owned enterprises have followed the principles of General Secretary Xi Jinping's important speech at the national meeting on building the role of the Party within SOEs, and placed Party building a major political duty. We have promoted the unity of the Party committee to play a leading role and the company's other governance bodies to exercise power and perform their duties in accordance with the law. In human resources management, both the Party and the market play their respective roles. Inside an SOE, there is both a Party organization and a corporate organization structure. The ideological and political work also goes hand in hand with the construction of corporate culture; the intra-Party supervision goes hand in hand with the internal supervision of the enterprise; and the Party building goes hand in hand with corporate management. As a result, the responsibility and awareness of the management of state-owned assets and state-owned enterprises have been continuously enhanced, the quality of party building work has been continuously improved, and the strong leadership of high-quality Party building has ensured the high-quality development of SOEs.

In the next step, in accordance with the requirements of the CPC Central Committee and the State Council, we will uphold and strengthen the Party's overall leadership over SOEs, further advance their reform, improve the structure of the state-owned economy, continuously improve the market-oriented mechanism, fully stimulate the vitality and efficiency of SOEs, and accelerate the building of world-class SOEs with global competitiveness so that they can play a leading and strategic supporting role in the national economy.

Thank you.

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