China to allow more private investment in state firms

Worker walks past oil refinery of China's Sinopec China will open its state-owned firms to greater investment by private companies, a state-run newspaper reported Monday, as media ramp up expectations from a top Communist Party meeting on economic reforms. According to the China Daily, private partners will be allowed to take 10 to 15 percent stakes in the country's state-owned enterprises (SOEs).
The move would give such companies or investors a bigger say in decision-making, it quoted officials of the state-owned Assets Supervision and Administration Commission (SASAC) as saying.
The agency is a powerful body that oversees large SOEs collectively worth trillions of dollars, many of which enjoy monopolies in key sectors such as rail and energy.
The change appears to differ from existing partial flotations of SOEs where China's big four state-owned banks are all quoted in Hong Kong and other overseas markets, as are units of oil giants Sinopec, CNOOC and CNPC, several subsidiaries of conglomerate China Resources, telecom behemoths China Mobile and China Unicom, and scores of other entities.
But partnerships are rare, with the China Daily noting the "rare exception" of a 2003 deal that handed private industrial conglomerate Fosun Group 49 percent ownership in a joint venture with state-run China National Medicine Corp.
"All kinds of companies could join SOE restructuring," the China Daily quoted Bai Yingzi, director of SASAC's enterprise reform division as saying.
The report came on the third day of a four-day gathering known as the Third Plenum at which leaders of the ruling Communist party are expected to draw up a decade-long blueprint for the world's second-largest economy.
The highly-anticipated meeting, which is being held at a heavily-secured Beijing hotel, has been used in the past by China's leaders as a launching pad for economic reforms.
But despite much raising of expectations by state-run media, analysts say that China is unlikely to embark on major reforms or privatisation of state firms, and that any reforms unveiled after the plenum will likely be limited to broad outlines rather than detailed policy changes.
The China Daily report said that "specific plans on SOE reforms are expected to be drafted after the third plenum".
In a major report issued in March, the Organisation for Economic Cooperation and Development said that China's progress on economic liberalisation had stalled since 2008.
Aside from opening up state-owned enterprises, other topics expected to be taken up at the four-day meeting include land and administrative reforms as well as changes to China's residency registration system.
Source: AFP