State Council Approves Plans to Overhaul State Owned Enterprises
The State Council has already approved a delayed blueprint that will overhaul State owned enterprises. The blueprints is aimed to place greater distance between the government and the day to day commercial operations of several State firms that inclues creating two new Temasek style sets of companies that channels funds to State owned enterprises and to pressure them in returning a profit. Temasek is a sovereign fund investment company that is based in Singapore that has a broad portfolio.
These State owned capital operating companies will allocate state funds that will monopolize state owned enterprises in critical sectors and manage stock rights rather that directly run a market driven industry. Based on the new system, SOEs in return will be able to make more own decisions in business and under their board of directors are also able to make manager level hiring. Party leadership that is sent by the State owned Assets Supervision and Administration Commission to these SOEs still remain unchanged.
During the Third Plenum of the Communist Party of China’s 18th Central Committee last November created the agenda for a new round of reforms. Since then China is pressing forward with plans to expand mixed ownership of SOEs to boost efficiency. According to economic research company based in Beijing the productivity gap between private companies and State owned widened ever since the financial crisis happened with an average return of 4.6 percent on assets in state entities and 9.1 percent for private companies.