China plans SOE reform and pilot reform zone operation for economic growth

Sep 09, 2015, 08:30 am

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By Hong Soon-do, Beijing correspondent, AsiaToday - China is making an active move to keep a fire of its economic growth alive. There have been many fire sticks, however it seems the most powerful ones seem to be reforming state-owned enterprises (SOEs) and operating pilot reform zones. These are expected to one of the most effective measures to revive the wobbly economy and stock market.

According to leading Beijing newspaper Beijing News on Tuesday, China is about to announce the SOE reform plan. The Communist Party and the State Council are expected to issue so-called the 'State-owned enterprise reform guideline' to all the Chinese governmental agencies soon. The document is dramatic enough to make a positive influence on the stock markets and the overall economy. According to the document, the government plans to restructure or merge state-run firms and attract private investments.

The government will also promote cross-shareholding and 'blending' between state-owned capital and private investments which are followed naturally when private capital investments are attracted. Moreover, free replacement of board of directors and internal compliance installment will be definitely included in the reform plan. In this case, government-run companies could have more diversified ownership by selling stakes to state and non-state investors. In some cases, there may be a separation of ownership and management rights. However, these could have positive effects on the economy if the benefits of each ownership are maximized.

An editorial cartoon showing the launch of Jingjinji pilot reform zone. If the 8 nationwide pilot reform zones run well, the Chinese economy will get the power out of the slump./ Source from search engine Baidu

The operation of pilot reform zones nationwide is not so much different. Upon the announcement of the State Council on Monday, the pilot reform zones are to be operated in eight provincial regions in China, including Jingjinji, which brings together Beijing, Tianjin and Hebei. The plan basically aims to operate the economy in the market economy's platform. China plans to intensify the reform if the plan makes an eye-opening progress by 2017. Zhao Hong, deputy head of the Beijing Academy of Social Sciences, expressed optimistic view on the situation, stating, "The operation of pilot reform zones means that China's socialist market economy has entered into advanced stage. It will have a positive impact on the shaky economy."

#China #SOE reform #pilot reform zone #Jingjinji 
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