Reform in management of China’s state-owned enterprises moves ahead

BOFIT Viikkokatsaus / BOFIT Weekly Review 2015/46

At the beginning of this month, the State Council released a more detailed plan for overhauling the management of state-owned enterprises (SOEs). Under the envisioned model, SOE operative management will be shielded from direct intervention of state officials by shifting oversight duties to state-owned investment companies. Similar state ownership models are followed in many countries, including Finland.

The investment company model has already been tried in China in a couple cases. The State-owned Assets Supervision and Administration Commission (SASAC) in charge of SOE reforms notes that new firms will be selected for an expanded pilot programme over the coming two years. Consequently, the progress in reform remains slow, even if the need for SOE reforms is acknowledged e.g. in the latest five-year plan. Moreover, the earlier released reform plans have emphasised greater state supervision as opposed to market-based competitiveness.

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