12 November 2013 | 14:18

China to allow more private investment in state firms: report

China will open its state-owned firms to greater investment by private companies, a state-run newspaper reported Monday, as media raise expectations over a top Communist Party meeting on economic reforms, AFP reports. According to the China Daily, private partners will be allowed to take 10 to 15 percent stakes in state-owned enterprises (SOEs). The move would give such companies or investors a bigger say in decision-making, it quoted officials of the State-owned Assets Supervision and Administration Commission (SASAC) as saying. The agency is a powerful body that oversees large SOEs collectively worth trillions of dollars, many of which enjoy monopolies in key sectors such as rail and energy. The change appears to differ from existing partial flotations of SOEs. China's big four state-owned banks are all quoted in Hong Kong and other overseas markets, as are units of oil giants Sinopec, CNOOC and CNPC, several subsidiaries of conglomerate China Resources, telecom behemoths China Mobile and China Unicom, and scores of other entities. But partnerships are rare, with the China Daily noting the "rare exception" of a 2003 deal that handed private industrial conglomerate Fosun Group 49 percent ownership in a joint venture with state-run China National Medicine Corp. "All kinds of companies could join SOE restructuring," the paper quoted Bai Yingzi, director of SASAC's enterprise reform division, as saying. The report came on the third day of a four-day gathering known as the Third Plenum at which leaders of the ruling Communist Party are expected to draw up a decade-long blueprint for the world's second largest economy. The highly-anticipated meeting, held at a heavily-secured Beijing hotel, has been used in the past by China's leaders as a launching pad for economic reforms. But despite much raising of expectations by state-run media, analysts say China is unlikely to embark on major reforms or privatisation of state firms, and that any reforms unveiled after the plenum will likely be limited to broad outlines rather than detailed policy changes. The China Daily report said that "specific plans on SOE reforms are expected to be drafted after the third plenum". In a major report in March, the Organisation for Economic Cooperation and Development said that China's progress on economic liberalisation had stalled since 2008. Aside from opening up state-owned enterprises, other topics expected to be taken up at the four-day meeting include land and administrative reforms. The Global Times, another state-run newspaper, noted on Monday under the headline "'Reform 2.0' to be unveiled" that urbanisation is among the items at the top of the agenda. Greater urbanisation is likely to increase pressure for changes to China's "hukou" residency system, which links social benefits to a person's registered place of abode. The current set-up means hundreds of millions who moved from the countryside to cities in search of work are denied equal access to state medical insurance, education and other services. "Such treatment has limited their purchasing power and raised social tensions," the paper wrote.

China will open its state-owned firms to greater investment by private companies, a state-run newspaper reported Monday, as media raise expectations over a top Communist Party meeting on economic reforms, AFP reports. According to the China Daily, private partners will be allowed to take 10 to 15 percent stakes in state-owned enterprises (SOEs). The move would give such companies or investors a bigger say in decision-making, it quoted officials of the State-owned Assets Supervision and Administration Commission (SASAC) as saying. The agency is a powerful body that oversees large SOEs collectively worth trillions of dollars, many of which enjoy monopolies in key sectors such as rail and energy. The change appears to differ from existing partial flotations of SOEs. China's big four state-owned banks are all quoted in Hong Kong and other overseas markets, as are units of oil giants Sinopec, CNOOC and CNPC, several subsidiaries of conglomerate China Resources, telecom behemoths China Mobile and China Unicom, and scores of other entities. But partnerships are rare, with the China Daily noting the "rare exception" of a 2003 deal that handed private industrial conglomerate Fosun Group 49 percent ownership in a joint venture with state-run China National Medicine Corp. "All kinds of companies could join SOE restructuring," the paper quoted Bai Yingzi, director of SASAC's enterprise reform division, as saying. The report came on the third day of a four-day gathering known as the Third Plenum at which leaders of the ruling Communist Party are expected to draw up a decade-long blueprint for the world's second largest economy. The highly-anticipated meeting, held at a heavily-secured Beijing hotel, has been used in the past by China's leaders as a launching pad for economic reforms. But despite much raising of expectations by state-run media, analysts say China is unlikely to embark on major reforms or privatisation of state firms, and that any reforms unveiled after the plenum will likely be limited to broad outlines rather than detailed policy changes. The China Daily report said that "specific plans on SOE reforms are expected to be drafted after the third plenum". In a major report in March, the Organisation for Economic Cooperation and Development said that China's progress on economic liberalisation had stalled since 2008. Aside from opening up state-owned enterprises, other topics expected to be taken up at the four-day meeting include land and administrative reforms. The Global Times, another state-run newspaper, noted on Monday under the headline "'Reform 2.0' to be unveiled" that urbanisation is among the items at the top of the agenda. Greater urbanisation is likely to increase pressure for changes to China's "hukou" residency system, which links social benefits to a person's registered place of abode. The current set-up means hundreds of millions who moved from the countryside to cities in search of work are denied equal access to state medical insurance, education and other services. "Such treatment has limited their purchasing power and raised social tensions," the paper wrote.

reforms news economy company CNPC China Asia Pacific