by Staff Writers
Beijing (AFP) July 26, 2017
China said Wednesday it would move to transform all state-owned companies into corporations by the end of this year, as part of efforts to reform the sclerotic industrial giants.
China has pledged for years that it would take steps to reform the centrally-run businesses, which dominate crucial industries ranging from power and steel to aviation.
But vested interests have resisted the attempts to restructure the massive enterprises, which are among the country's largest employers and have created powerful fiefdoms for the bureaucrats that run them.
State-owned enterprises (SOEs) managed by the central government should aim to become "limited companies or corporations" by the end of the year, according to a statement on the website of the State Council, China's cabinet.
The change will help "build a modern enterprise system and improve the market-oriented management mechanism", it said.
Ninety percent of China's state enterprises have already been turned into corporations, according to the statement.
It did not say whether the companies will be opened to private investment or could be listed on the country's stock markets.
The announcement follows comments earlier in the month from President Xi Jinping calling for authorities to deepen SOE reform by "focusing on the establishment of a modern corporate governance system".
He described SOEs as an "important foundation for national development" but said overhauling them was important to enhance their "vitality, competitiveness and risk resistance", according to the official Xinhua news agency.
China's lumbering state-owned giants have long been a drag on the economy, saddled with massive debts and overcapacity far exceeding domestic demand.
While the government recognises the need for restructuring, it lacks the political will to make the necessary reforms, fearing that mass lay-offs at the underperforming firms could lead to social instability.
Last month the International Monetary Fund urged Beijing to phase out support for underperforming state-owned enterprises and for so-called zombie companies -- those firms that survive only on rolling credit from the banks.
Beijing (AFP) July 23, 2017
Yang Qianqian holds out her smartphone to scan a barcode on the mobile of a vendor selling fresh fruit and vegetables at a bustling outdoor market in Beijing. The dance student is part of an explosion in the use of mobile payment platforms in China as consumers increasingly take out phones instead of cash to pay for everything from a coffee to a language class or a gas bill. "Even though ... read more
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