Diverse ownership to boost SOE reforms

The Chinese government's vow to boost diverse ownership means state-owned enterprise (SOE) reform, experts said.

Ding Yifan, deputy director of the Institute of World Development under the State Council's Development Research Center, said a communique, issued after a key meeting of the Communist Party of China (CPC) Central Committee, set diverse ownership as the future development direction.

The move is a result of complaints about SOEs' low efficiency and them receiving too many favors from government, said Ding in a program on Chinese reforms aired on Sunday on China Xinhua News Agency Network Co. Ltd. (CNC).

The external situation is another reason. For example, the United States is building a Trans-Pacific Partnership (TPP). which has a rule that forbids SOEs in its free trade zone, he said.

As a result, Chinese SOEs need to change, Ding said.

China will promote an economy with diverse ownership, reads the communique released after the Third Plenary Session of the 18th CPC Central Committee in November. It stresses that state-owned, collective and non-public funds hold each other's shares.

The government wants to give the market the key role in the distribution of resources. "I believe a key part is to grow enterprises with core competitive edges," said Sun Pishu, chairman of Inspur Group, in the CNC program.

The time has come to step up reforms and diversify ownership, said Lu Guiqing, chairman of China Construction Fifth Engineering Division Corp., Ltd., in the program.

"Operating a SOE, is like dancing with shackles...if the binding (from government) is relaxed, I will be able to move faster...and perform better," Lu said.

The target of the reforms is to build a modern corporate system, and diverse ownership is in essence a modern corporate system, Chen Xian, executive director of the economics college in Shanghai Jiao Tong University, told the program.

"Both public and non-public sectors of the economy are important components of the socialist market economy and significant bases for economic and social development," reads the communique.

Development in the non-public sector will be encouraged and it will in turn stimulate vitality and creativity in the whole economy, while maintaining the dominance of the public sector, it says.