The Proportion of SOEs is not the Measurement of Socialism

Mr. Siping Zhang, former member of the Standing Committee of the CPC Shenzhen Municipal Committee attended the Sanya Forum on Challenges in Global Governance and the Role of China, hosted by Caijing Magazine on December 10^th. Mr. Zhang joined the panel on SOE reform and elaborated on the challenges and prospects of mixed-ownership reform.

Zhang points out that mixed-ownership reform should go beyond incorporating private strategic investors in state-controlled firms.

Retreat of state assets or holdings is also part of the mixed-ownership reform. Mixed-ownership reform has three different levels, according to Zhang:

• At the macro-level, it is important to have private firms break into the sectors traditionally dominated by SOEs. As China’s basic economy system involves an emphasis on public ownership and the development of all types of ownerships, the prosperity and development of the private sector IS the mixed-ownership reform at the macro-level.

• At the intermediate level, as an integral part of the restructure of the distribution of state economy, mixed-ownership reform requires not only the advances and expansion of SOEs but also the retreat and exit of SOEs in certain industries

• At the micro-level, SOEs should shift their focus from competitive and risk-taking industries to public welfare provisions.

Zhang argues that the proportion of SOEs is not the measurement or characteristics of socialism. Rather, the access to the benefits of development for all under the leadership of CCP is the essence of socialism.