BEIJING • All big companies owned by the central government will be registered as limited liability companies or joint-stock firms by the end of this year, as China moves to make its state-owned giants more nimble, efficient and modern.
About 90 per cent of China's state-owned firms have already completed the process, which has improved their governance structures and management, the Cabinet said in a statement yesterday.
It did not say whether private capital will be allowed to invest in the state-owned enterprises (SOEs) or whether they will list shares.
The central government hopes to revive the bloated and debt-ridden state-owned sector and create "bigger and stronger" conglomerates capable of competing on the global stage. The reforms will include shutting the most uncompetitive firms. The ownership structure of some SOEs will also be modernised.
One of the biggest problems China faces, particularly the lumbering state-owned giants, is a spike in debt since the 2008 global financial crisis. The authorities have stepped up efforts - such as by restructuring state firms - to contain debt risks in the past year.
Earlier this year, People's Bank of China governor Zhou Xiaochuan said banks will withdraw support for financially unviable firms, repeating pledges by officials to drive "zombie" firms out of the market.
China is also pushing mixed ownership to allow private capital to invest in firms while retaining state presence in the companies.
The state-owned asset regulator has said "erroneous" notions like "privatisation" and "de-nationalisation" should be avoided.
Efforts will be made to strengthen the party's leadership at big state firms and to prevent loss of state assets during restructuring, the Cabinet said. The party's leadership will also help protect employees' legal rights and ensure the stability of corporate reforms, it said.
Focus will also be on the formation of the board of directors at state-owned companies, the Cabinet said, to bring it in line with current corporate governance practices. The board will have say in major corporate decisions, hiring and salary distribution.
The central government currently owns and administers 101 enterprises in sectors ranging from nuclear technology to medicine. The SOE reforms come as the Communist Party prepares for a once-in-five-years congress in autumn.