SHANGHAI/BEIJING • China will continue to "deepen" reform of state-owned enterprises and experiment with new ownership structures, but strengthening the leadership of the ruling Communist Party remains the guiding principle, the head of the state asset regulator said.
Imposing party discipline on state firms remains a key part of China's efforts in the fight against graft, and to "upgrade"domestic industry and dominate overseas markets, said Mr Xiao Yaqing, chairman of the State-Owned Asset Supervision and Administration Commission, in remarks published on Tuesday.
The reforms, he added, were part of efforts to build a new "socialism with Chinese characteristics", as well as other strategies set out by President Xi Jinping during the Communist Party congress last month.
Mr Xiao said: "The state-owned firm is an important force to promote national modernisation and safeguard public interests, and an important material and political foundation for the development of party and state affairs."
China's total state-owned assets, excluding the financial and cultural sectors, reached 154.9 trillion yuan (S$32 trillion) by the end of last year, up 73.1 per cent from 2012, Mr Xiao said.
But he added that despite major breakthroughs in industries such as space flight and high-speed rail, state enterprises still suffer from "imbalances" and structural flaws, and must create management systems and market mechanisms better suited to China's new needs.
He said China will continue to streamline and "upgrade" state firms, promote restructuring and mergers, as well as develop strategic sectors, curb overcapacity and tackle "zombie enterprises".
China began reforms of state firms in a bid to rescue the crisis-hit sector by using market forces to revive lumbering and debt-ridden industrial giants. When China published a groundbreaking reform document in September 2015, state media focused on pledges to develop "independent market entities that operate, take on profits, losses and risks, and make decisions themselves".
Yesterday, the government said it has chosen 31 more government-owned firms to participate in the third round of mixed ownership reforms aimed at injecting private capital into the state sector.
The mixed ownership reform plan is designed to inject market discipline into China's debt-ridden state sector, and pump more financing into it.
The Cabinet, or State Council, has already decided which firms to include. It has chosen state enterprises run by regional authorities as well as the central government, said Ms Meng Wei, vice-head of the policy research office of the National Development and Reform Commission. "Now, we are pressing the pilot enterprises to draw up implementation plans," she said.
The 19 pilot firms selected in the first and second rounds of reform are now gradually implementing their restructuring programmes, she said, adding that China's overall reform plans remained on track.
More than a third have "basically completed" reforms aimed at introducing new investors, boosting corporate governance and setting up new internal incentive mechanisms, she said.