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Opinions on Several Major Issues on the Reform of State-owned Enterprises

Author: Source: Date:2017-08-31

The Decision of the CCCPC on Some Major Issues ConcerningComprehensively Deepening the Reform serves as the top-level design of SOE reform, and it consists of a series of major decisions, including developing mixed ownership, transforming state-owned assets management from asset management to capital management, and sticking to the separation of government and capital, and separation of government and enterprise. It was well received by the public, and the whole nation had great expectations toward the new round of SOE reform.

Since then, the State Council and other relevant state departments have released 1+N documents, such as Guidelines on Deepening the Reform of SOEs, and Guidelines on Defining and Classifying Functions of SOEs. As the Decision serves as the overall plan and top-level design, the1+N documents serve as construction plans and drawing designs of the reform.

However, after the release of 1+N documents, the reform has only been visible within the government, leaving the general public and enterprises indifferent and unaffected. Such grand reform is stagnated at the stage of construction plans and drawing designs, and the ground-breaking day seems to be far away. We believe that the following factors have led to this situation. SOEs have been reactive rather than proactive towards the reform; most local governments have taken a wait-and-see attitude to those documents; private enterprises have not been very much interested in participating in the reform; and the general public has been indifferent to those documents.

Lack in both methodology and theory has contributed to the stagnation of SOE reform. Methodologically speaking, the way of designing the reform plan is divorced from the reality. Relevant state departments failed to solicit valuable opinions or advice from SOEs, local governments or the general public. The documents released are obviously based on their own interests, and are unlikely to be fully carried out or well received by the public. As to the theory, the drawing design itself falls below the mark. When it comes to major issues on the SOE reform, 1+N documents fail to present the core value of the top-level design, as there is no clear approach or measure to bring the design into reality. And the experience of SOE reform in the past decades, especially in the last decade, is not well summarized. Therefore, even if the documents are well implemented, it is difficult to achieve the goal set in the top-level design.

Shenzhen Special Economic Zone, established at the beginning of the Reform and Opening up, has witnessed a lot of exploration of SOE reform during its development, and stands ready to offer its lessons to other cities in China. SOEs in Shenzhen are leading the pack in many aspects, such as the system, mechanism and economic benefits, which is well recognized by the State-owned Assets Supervision and Administration Commission(SASAC) of the State Council. I am very privileged to have been involved in the whole process of the reform of SOEs in Shenzhen, especially from 2003 to 2010, during which time I led and promoted a range of reforms, including enterprise restructuring, distribution adjustment, institutional transition, recapitalization, making industrial groups bigger, stronger and better, and transforming enterprises owned by Party and government institutions. The successes and failures have led to reflections on both the theory and practice of SOE reform. Based on that, I would like to share my opinions on several major issues on the reform, and I am open to your comments and suggestions.

Opinions on Several Major Issues on the Reform of State-owned Enterprises