Commentary: China’s central SOEs step into high-quality development

China’s central state-owned enterprises (SOEs) are stepping into high-quality development with sustained and fast growth as they secure great performance in revenue and profit. In the first half year, the Chinese central SOEs registered total revenues of 13.7 trillion yuan ($1.99 trillion) and profit of 887.79 billion yuan, up 10.1 and 23 percent year on year respectively. The profit figure in June reached a historic high of 201.88 billion yuan, growing by 26.4 percent from a year before. While China’s gear of national economic growth is shifting from high speed to medium-to-high speed, these central enterprises have presented a satisfactory answer sheet. It is a result of their efforts to deepen reform, transform development mode and optimize mechanism. In recent years, the central SOEs have, under strategic guidance, focused on their main bushiness and developed real economy. Every one of them has confirmed the major scope of business and taken it as strategic direction. Relentless efforts of the enterprises gave a boost to their major business, thus contributing to their expansion, quality improvement and efficiency promotion. Great efforts have been made to deepen reforms. By vigorously advancing various pilot reforms and accelerating the building of the market-oriented management mechanism, the central SOEs stimulated the inner drive, regained energy and improved operational efficiency. Central SOEs have attached great importance to regrouping and the optimization of resources allocation since the 18th National Congress of Communist Party of China. The State-owned Assets Supervision and Administration Commission (SASAC) of the State Council has finished 20 restructurings involving 38 central SOEs and reduced the number of SOEs to 96. Horizontal mergers enlarge business scales; vertical mergers reinforce complementary advantages; the integration of inter-related businesses relocates resources. All these methods can enhance the asset quality and push enterprises for synergistic development. To improve supply capacity and development quality, central SOEs have been promoting supply side structural reform, reducing legal entities, deducting management levels, cutting excessive capacity, and restocking in recent years. As a result, they have cut the dead wood and improved assets quality. Meanwhile, by stressing scientific innovation and putting into practice China’s new development philosophy, the central SOEs achieved substantial results regarding innovation. They received 83 national science and technology awards in 2017, accounting for 35.2 percent of the total quota. Scientific innovation largely improved the profit and development of central SOEs. In addition, the SOEs prudently deprived and transferred the social function from enterprises to solve the issues left over from history. By the end of June, 94 percent of central SOEs have completed the transfer of water, power and air supplies and property management or signed transfer deals, meeting the expected goals. In the future, the central SOEs will focus on improving profits, promoting efficiency and building up core capabilities, and make great efforts to deepen the mixed-ownership reform, advance research and innovations and promote the restructuring between and inside the central SOEs so as to realize high-quality development.

By Xu Baoli, a researcher at the research center under State-owned Assets Supervision and Administration Commission of the State Council

(People’s Daily)