China to push reform of state-owned enterprises - media

Reuters

SHANGHAI (Reuters) - China is expected to discuss increased supervision for state-owned firms and the break-up of some monopolies to encourage competition as part of reform efforts at a key Communist Party meeting this month, local media reported on Friday.

Analysts have warned that control of key economic sectors, such as energy and telecoms, by China's giant state-owned enterprises (SOEs) impedes growth and have recommended that their markets should be thrown open to competition.

Citing unidentified sources, the China Securities Journal said supervision of SOEs will be a key issue to be discussed behind closed doors at the party's third plenum on November 9-12, alongside proposals to potentially break up some state monopolies.

Other suggested changes include reducing SOEs' role in carrying out the government's economic agenda, the issuance of preference shares to help SOEs exit from some sectors, restructuring and listing of some state firms and allowing more private capital into state-dominated sectors, the paper said.

Reform of SOEs has been slow, mainly due to resistance from vested interests, but the debate gained new traction when the head of China's state assets regulator, Jiang Jiemin, was put under investigation for "serious disciplinary violations", shorthand generally used to describe graft.

Jiang also served as the former chairman of state-owned energy giant China National Petroleum Corporation (CNPC).

The State-owned Assets Supervision and Administration Commission, which administers more than a hundred of China's biggest state-owned companies, said last month that companies and regulatory agencies should ready themselves for an overhaul of SOEs after the third plenum, local media reported.

An influential think-tank, the State Council's Development Research Centre, late last month recommended ending state-owned monopolies in the rail, oil and gas, and electricity industries, as a key reform.

Recent media reports suggest China's government and energy sector regulators are intent on breaking up the energy sector monopolies, given their sheer size. These include CNPC, China Petroleum & Chemical Corp, also known as Sinopec Group, and CNOOC Ltd .

Proposals being discussed include issuing more crude import quotas, increasing access to exploration resources, pipelines and other related infrastructure to private investors.

Still, investors harbour doubts over how far China's leaders will go to shake up state-owned firms, given the difficulty of making change.

(Reporting by Fayen Wong and Lu Jianxin; Editing by Richard Pullin)

Rates

View Comments (0)