Comprehensively deepen state-owned enterprise reform and fully leverage the leading role of the state-owned economy.
— A senior official from the State-owned Assets Supervision and Administration Commission of the State Council answers questions from reporters on the “Guiding Opinions on Deepening the Reform of State-owned Enterprises.”

Xinhua News Agency, Beijing, September 13 (Reporters Zhao Xiaohui and Hua Yedi) — Recently, the CPC Central Committee and the State Council issued the "Guiding Opinions on Deepening the Reform of State-Owned Enterprises" (hereinafter referred to as the "Guiding Opinions"), laying out major plans for deepening the reform of state-owned enterprises. Zhang Yi, Director and Party Secretary of the State-owned Assets Supervision and Administration Commission of the State Council, answered questions from Xinhua News Agency reporters on issues related to the formulation and implementation of the "Guiding Opinions."

Q: Could you please tell us about the background behind the drafting of the “Guiding Opinions”?

Answer: Since the reform and opening-up, state-owned enterprises have continuously made significant progress in their reform and development. Overall, they have become fully integrated with the market economy, with markedly improved operational quality and efficiency. A number of backbone enterprises with core competitiveness have emerged in both domestic and international markets, making major contributions to promoting economic and social development, safeguarding and improving people’s livelihoods, expanding into international markets, and enhancing our country’s overall national strength. The management teams of state-owned enterprises are generally competent, and the vast majority of employees have made unremitting efforts, achieving remarkable accomplishments. However, we must also recognize that state-owned enterprises still have many imperfections in terms of management systems, operational mechanisms, and industrial layout structures, and there remain several pressing contradictions and problems that urgently need to be addressed. Looking ahead, state-owned enterprises will face even fiercer international competition and shoulder ever greater missions and responsibilities. Deepening the reform of state-owned enterprises is of great significance for upholding and perfecting the basic economic system, staying committed to the path of socialism with Chinese characteristics, implementing the “Four Comprehensive” strategic layout, realizing the Chinese Dream of the great rejuvenation of the Chinese nation, adapting to the new normal of economic development, driving China’s economy toward medium-to-high-speed growth and upgrading to the mid-to-high end level, and removing institutional and mechanistic shortcomings to strengthen, optimize, and expand state-owned enterprises.

The Party Central Committee and the State Council attach great importance to the reform of state-owned enterprises. The Third Plenary Session of the 18th CPC Central Committee specifically made major arrangements, further clarifying the direction for deepening the reform of state-owned enterprises. To better implement the "Decision of the CPC Central Committee on Several Major Issues Concerning Comprehensively Deepening Reform," and in accordance with the deployment of the Leading Group for Comprehensively Deepening Reform under the CPC Central Committee, and under the direct leadership of the State Council, the State-owned Assets Supervision and Administration Commission of the State Council, together with the National Development and Reform Commission, the Ministry of Finance, and other relevant departments, drafted the "Guiding Opinions" through thorough investigation and research as well as extensive consultation with stakeholders. After multiple rounds of study and revision, the draft document was submitted successively to the Executive Meeting of the State Council, the Meeting of the Leading Group for Comprehensively Deepening Reform under the CPC Central Committee, and the Standing Committee of the Political Bureau of the CPC Central Committee for deliberation and approval, and was subsequently promulgated and implemented in the name of the CPC Central Committee and the State Council.

Q: What are the guiding principles and basic tenets for deepening the reform of state-owned enterprises?

Answer: The Guiding Opinions point out that deepening the reform of state-owned enterprises requires adhering to and improving the basic economic system, staying true to the direction of socialist market economy reform, adapting to the new trends of marketization, modernization, and internationalization, taking the liberation and development of social productive forces as the benchmark, and focusing on enhancing the vitality of state-owned enterprises and improving the efficiency of state-owned capital. It calls for perfecting a modern enterprise system characterized by clear property rights, well-defined responsibilities, separation of government and enterprise, and scientific management; improving the regulatory framework for state-owned assets to prevent their loss; fully promoting corporate governance based on the rule of law; strengthening and improving Party leadership over state-owned enterprises; making state-owned enterprises stronger, better, and bigger; continuously enhancing the vitality, control, influence, and risk-resistance capacity of the state-owned economy; proactively adapting to and leading the new normal of economic development; and making positive contributions to promoting sustained, healthy economic and social development and realizing the Chinese Dream of the great rejuvenation of the Chinese nation.

The “Guiding Opinions” clearly outline five principles that must be upheld in the reform. First, we must uphold and improve the basic economic system—this is the fundamental requirement that must be grasped in deepening the reform of state-owned enterprises. Second, we must adhere to the direction of socialist market economy reform—this is the basic law that must be followed in deepening the reform of state-owned enterprises. Third, we must combine enhancing vitality with strengthening regulation—this is an important relationship that must be properly handled in deepening the reform of state-owned enterprises. Fourth, we must uphold the Party’s leadership over state-owned enterprises—this is the political direction and political principle that must be firmly upheld in deepening the reform of state-owned enterprises. Fifth, we must adopt a scientific approach characterized by proactive, steady, and coordinated advancement—this is the method that must be employed in deepening the reform of state-owned enterprises.

Q: Could you please share with us the main objectives and key tasks for deepening the reform of state-owned enterprises?

Answer: The primary goals of state-owned enterprise reform are, by 2020, to establish a state-owned asset management system, a modern enterprise system, and market-oriented operational mechanisms that better align with China’s basic economic system and the requirements for developing a socialist market economy. The structure of state-owned capital allocation will become more rational, fostering a large number of outstanding entrepreneurs who are both virtuous and talented, adept at management, and full of vitality. We will also cultivate a group of leading state-owned enterprises that possess strong innovation capabilities and international competitiveness. As a result, the vitality, control, influence, and risk-resistance capacity of the state-owned economy will be significantly enhanced.

To achieve the goals of state-owned enterprise reform, we must focus on six key tasks. First, promote state-owned enterprise reform in a categorized manner. Divide state-owned enterprises into commercial and public-service categories, deepen their integration with the market economy, and foster an organic unity between economic and social benefits. Second, improve the modern enterprise system. Advance corporate and joint-stock reforms, refine corporate governance structures, establish a tiered management system for enterprise leaders, implement compensation and distribution systems that are compatible with the socialist market economy, and further deepen reforms of internal personnel systems. Third, perfect the state-owned asset management system. Shift the focus of state-owned asset regulatory agencies toward managing capital, reform the authorization and operation system for state-owned capital, promote the rational flow and optimized allocation of state-owned capital, and advance centralized and unified supervision of commercially operated state-owned assets. Fourth, develop a mixed-ownership economy. Introduce non-state-owned capital into state-owned enterprise reform, encourage state-owned capital to invest in non-state-owned enterprises through various channels, and explore employee stock ownership schemes in mixed-ownership enterprises. Fifth, strengthen oversight to prevent the loss of state-owned assets. Enhance internal enterprise oversight, establish and improve efficient and coordinated external oversight mechanisms, implement information disclosure to bolster social oversight, and strictly enforce accountability. Sixth, strengthen and improve Party leadership over state-owned enterprises. Implement the principle of comprehensive and strict Party governance, fully leverage the political core role of enterprise Party organizations, reinforce the building of enterprise leadership teams and talent pools, and effectively carry out the “two responsibilities” for anti-corruption and integrity-building within enterprises.

Q: What reform measures have been proposed to enhance the vitality and market competitiveness of state-owned enterprises?

Answer: The starting point and ultimate goal of deepening state-owned enterprise reform is to transform state-owned enterprises into independent market entities, fully stimulate and unleash their vitality, enhance their market competitiveness, and strengthen their role as drivers of development.

The Guiding Opinions emphasize that deepening the reform of state-owned enterprises must follow the laws of the market economy and the laws governing enterprise development. We must uphold the separation of government and enterprises, the separation of government and assets, and the separation of ownership from operational management authority. We should ensure that rights, obligations, and responsibilities are unified, and combine incentive mechanisms with constraint mechanisms, so that state-owned enterprises truly become independent market entities that operate autonomously in accordance with the law, assume their own profits and losses, bear their own risks, exercise self-discipline, and pursue their own development. First, we must implement enterprise autonomy in accordance with the law. We will continue to streamline administration and delegate power, and legally enforce corporate property rights and autonomous operating rights. We will transform the functions of state-asset regulatory agencies—from primarily managing enterprises to primarily managing capital—and return to enterprises those matters that, according to law, should be decided autonomously by the enterprises themselves. We will earnestly implement and safeguard the board of directors’ lawful exercise of powers such as making major decisions, selecting and appointing personnel, and determining remuneration, while also guaranteeing the operational autonomy of the management team. No department or agency may interfere without legal authorization. Second, we must promote enterprises in perfecting market-oriented operational mechanisms. We will advance corporatization and shareholding system reforms, actively attract various types of investors to achieve diversified equity structures, and vigorously promote the restructuring and listing of state-owned enterprises. Focusing on strengthening the construction of boards of directors, we will improve the corporate governance structure. We will establish a classified and hierarchical management system for enterprise leaders, implement a professional manager system, and appropriately increase the proportion of personnel selected through market-based recruitment. We will adopt a remuneration distribution system that is compatible with the socialist market economy. We will deepen reforms of internal personnel systems within enterprises, establishing a rational mobility mechanism that allows for both promotion and demotion, as well as entry and exit. Third, we must facilitate enterprises’ fair participation in competition. We will refine relevant laws, regulations, and supporting policies; accelerate the separation of social functions previously performed by enterprises and resolve historical outstanding issues, thereby creating favorable conditions for state-owned enterprises to participate fairly in market competition.

Q: What reform measures have been proposed to strengthen the supervision of state-owned assets, with a focus on managing capital?

Answer: Strengthening state-owned asset supervision with a focus on managing capital is a new requirement put forward at the Third Plenary Session of the 18th CPC Central Committee, and it represents the direction and key focus for perfecting the state-owned asset management system. To this end, the “Guiding Opinions” propose the following measures: First, promote the transformation of functions of state-owned asset supervision institutions by focusing on managing capital. Accurately define the role of fulfilling investor responsibilities, establish clear lists of regulatory powers and responsibilities, and shift the focus from managing enterprises to managing capital. For matters that should be managed, adopt scientific management practices and ensure full accountability; prioritize effective oversight of the layout of state-owned capital, standardize capital operations, enhance capital returns, and safeguard capital security. For matters that should not be managed, delegate authority in accordance with the law and avoid overstepping boundaries—returning to enterprises those matters that, according to law, should be autonomously decided by the enterprises themselves; generally transferring management responsibilities extended to subsidiary enterprises back to the primary-level enterprises; and assigning public management functions that the enterprises are required to support to the relevant government departments and agencies. Second, reform the authorization and operation system for state-owned capital with a focus on managing capital. Reorganize and establish state-owned capital investment and operation companies as specialized platforms for the market-oriented operation of state-owned capital, enabling them to independently carry out state-owned capital operations in accordance with the law, exercise shareholder duties toward their invested enterprises, and truly assume responsibility for preserving and enhancing the value of state-owned capital based on the principle of aligning responsibilities with powers. Third, promote the rational flow and optimized allocation of state-owned capital with a focus on managing capital. Guided by the market and centered on enterprises, optimize the layout and structure of state-owned capital to enhance the overall functionality and efficiency of the state-owned economy. Fourth, advance centralized and unified supervision of commercially operated state-owned assets with a focus on managing capital. Steadily integrate state-owned capital belonging to Party and government organs and public institutions into the centralized and unified supervision system for commercially operated state-owned assets, strengthen basic management of state-owned assets, and establish a state-owned capital operating budget system covering all state-owned enterprises and featuring tiered management.

Q: What requirements and measures have been proposed for developing a mixed-ownership economy?

Answer: The “Guiding Opinions” clearly state that the development of a mixed-ownership economy should aim to promote the transformation of operating mechanisms in state-owned enterprises, enhance the functions of state-owned capital, improve the efficiency of state-owned capital allocation and operation, and enable various forms of ownership capital to leverage their respective strengths, foster mutual complementarity, and achieve common development. It is essential to fully harness the role of market mechanisms, adhere to tailored approaches based on local conditions, industry characteristics, and individual enterprise circumstances—adopting a strategy that suits each case whether it involves full independence, controlled participation, or minority stakeholding—avoiding forced pairings, eschewing blanket coverage, and refraining from setting rigid timelines; instead, advancing reforms incrementally as each step reaches maturity. We must actively introduce non-state-owned capital into the reform of state-owned enterprises, encouraging non-state-owned investors to participate—in diverse ways—in the restructuring and reorganization of state-owned enterprises, in the capital increases and share expansions of state-controlled listed companies, and in corporate management and operations. Such participation should ensure equal rights and interests for all shareholders, effectively safeguarding the legitimate rights and interests of all types of shareholders. In sectors such as oil, natural gas, electricity, railways, telecommunications, resource development, and public utilities, we should accelerate the introduction of a batch of projects that align with industrial policies and are conducive to industrial upgrading and transformation, targeting non-state-owned capital. We should also launch pilot programs for various forms of public-private partnerships and gradually expand the application of the public-private partnership model. State-owned capital should be encouraged to take equity stakes in non-state-owned enterprises through diverse means, leveraging market-based approaches and focusing on key areas such as public services, high technology, ecological protection, and strategic industries, thereby making equity investments in non-state-owned enterprises with strong growth potential and promising prospects. State-owned enterprises should be encouraged to engage in equity integration, strategic cooperation, and resource consolidation with non-state-owned enterprises through various methods, including direct investment, joint ventures, and restructuring. We should explore implementing employee stock ownership plans in mixed-ownership enterprises, steadily and prudently advancing these initiatives based on successful pilot experiences. The promotion of mixed-ownership reform must be carried out in strict accordance with laws and regulations, following rigorous procedures, and ensuring openness and fairness. We must earnestly protect the property rights and interests of all investors in mixed-ownership enterprises and firmly prevent the loss of state-owned assets. Question: Could you elaborate on how we can strengthen supervision and prevent the loss of state-owned assets during the reform of state-owned enterprises?

Q: Could you please share your thoughts on how to strengthen supervision and prevent the loss of state-owned assets during the reform of state-owned enterprises?

Answer: State-owned enterprises must first strengthen supervision and prevent the loss of state-owned assets. If this crucial task is not properly addressed, it will be difficult for other reforms in state-owned enterprises to achieve the desired outcomes. This is an important lesson learned and a key requirement for advancing the reform of state-owned enterprises. To reinforce supervision and prevent the loss of state-owned assets, the "Guiding Opinions" emphasize the following four points: First, strengthen internal enterprise supervision. We must improve the internal supervision system within enterprises, intensify oversight over departments and positions where power is concentrated, funds are abundant, resources are plentiful, and assets are clustered, and enhance internal process controls to prevent abuse of power. Second, establish and improve an efficient and coordinated external supervision mechanism. We should strengthen investor oversight, enhance and refine the system of dispatched supervisory boards, bolster audit, disciplinary inspection, and inspection efforts, integrate supervisory resources, and create a closed-loop system for supervision. Third, implement information disclosure to strengthen social oversight. We must improve the system for disclosing information on state-owned assets and state-owned enterprises, promptly address public concerns, and effectively safeguard the public’s right to know about and supervise the operation of state-owned assets by enterprises. Fourth, strictly enforce accountability. We must establish and improve mechanisms for tracing back and holding accountable those responsible for major decision-making errors, negligence, or dereliction of duty in state-owned enterprises. We should also establish and refine mechanisms for supervising and holding enterprises accountable for their state-owned assets, firmly curbing corruption such as embezzlement, bribery, transfer of assets, and squandering of state-owned assets, and rigorously investigating and punishing violations of laws and discipline.

Q: How can we further strengthen and improve the Party’s leadership over state-owned enterprises?

Answer: In deepening the reform of state-owned enterprises, the Party’s leadership must be strengthened—not weakened. The “Guiding Opinions” put forward specific requirements and measures for further strengthening and improving the Party’s leadership over state-owned enterprises. First, we must fully leverage the political core role of Party organizations in state-owned enterprises. We should integrate strengthening Party leadership with improving corporate governance, incorporate the general requirements for Party building into the articles of association of state-owned enterprises, and ensure that Party building is planned, organized, staffed, and carried out in parallel with enterprise reform. We must uphold and improve the leadership system of two-way entry and cross-appointment. We should establish and refine a responsibility system for Party building, strengthen the construction of grassroots Party organizations and the ranks of Party members in state-owned enterprises, and enhance the leadership of enterprise Party organizations over mass work. Second, we must further strengthen the building of leading teams and talent pools in state-owned enterprises. Based on the needs of enterprise reform and development, we should clarify standards and procedures for selecting and appointing personnel and innovate methods for personnel selection and appointment. We must adhere to the principle of Party management of cadres, reinforce the responsibilities of enterprise Party organizations in the selection, appointment, training, education, and supervision of enterprise leaders, and support the board of directors in selecting business managers in accordance with the law and business managers in exercising their personnel rights according to the law. We must intensify daily supervision and comprehensive assessment of enterprise leaders, promptly removing those who are incompetent or unfit for their positions. We must also strengthen the development of entrepreneurial teams and fully harness the role of entrepreneurs. Third, we must earnestly implement the “two responsibilities” for anti-corruption and clean governance in state-owned enterprises. Enterprise Party organizations must fulfill their principal responsibilities, while disciplinary inspection bodies must carry out their supervisory responsibilities. We should intensify education on Party spirit, rule-of-law awareness, and cautionary education, establish a practical and effective accountability system, implement “dual investigation for each case,” strengthen the leadership of higher-level discipline inspection commissions over lower-level ones, enhance and improve inspection work in state-owned enterprises, perfect the institutional framework for anti-corruption and clean governance, strictly enforce regulations against the “four undesirable practices,” and strive to build an effective mechanism that deters corruption, makes it impossible to engage in corruption, and discourages corrupt behavior among enterprise leaders.

Q: How will the State-owned Assets Supervision and Administration Commission ensure the effective implementation of the “Guiding Opinions”?

Answer: Thoroughly implementing the “Guiding Opinions” and comprehensively deepening state-owned enterprise reform are crucial tasks for the State-owned Assets Supervision and Administration Commission (SASAC) both now and in the period ahead. We must resolutely carry out the major directives of the Party Central Committee and the State Council on the reform and development of state-owned enterprises, unswervingly uphold the important role of state-owned enterprises in national development, and remain steadfast in making state-owned enterprises better, stronger, and bigger. We should promote the continuous deepening of state-owned enterprise reform according to the criteria of “being conducive to preserving and enhancing the value of state-owned capital, enhancing the competitiveness of the state-owned economy, and maximizing the functions of state-owned capital.” First, we will earnestly study the document to ensure a thorough grasp of its spirit. We will adopt various forms to organize extensive study sessions among SASAC staff and employees of central enterprises, helping them deeply understand and accurately grasp the essence of the “Guiding Opinions,” and maintain high ideological, political, and practical alignment with the Party Central Committee with Comrade Xi Jinping as General Secretary. We will firm up our confidence, take on responsibilities courageously, and strive diligently. Second, we will strengthen organizational leadership and ensure comprehensive planning. Leading officials at SASAC and central enterprises will earnestly assume their leadership responsibilities, personally deploying and coordinating efforts, and personally supervising and urging implementation. Each level will take charge of the level above it, ensuring that reforms are carried out effectively at every stage. We must not only coordinate the overall situation of reform and synergistically advance various reform tasks, but also focus on key areas based on actual conditions to achieve breakthroughs in reform. We must pay attention to both immediate needs and long-term goals, properly balance the relationship among reform, development, and stability, and carefully manage the sequence, pace, and intensity of reform to promote it in an orderly, powerful, and effective manner. Third, we will adhere to a problem-oriented approach and vigorously implement work. In advancing reform, we will start with the major issues facing state-owned enterprise reform, focus on critical points that affect the survival and development of enterprises, remove institutional and systemic barriers and constraints, and address the heartfelt expectations of employees. We will accurately identify problems, provide precise guidance, exert targeted efforts, and ensure that reforms are both pertinent and effective. We will regard pilot programs as an important method for promoting reform, fully respect the pioneering spirit at the grassroots level, encourage exploration, and give full play to the demonstration, breakthrough, and driving roles of pilots in overall reform. Fourth, we will strengthen publicity and guidance to create a favorable environment. We will vigorously publicize the central government’s policies and guidelines on deepening state-owned enterprise reform, highlight the remarkable achievements made in the reform and development of state-owned enterprises, and strive to foster a social atmosphere of understanding, support, and promotion of reform. At the same time, we will optimize the policy environment, actively coordinate and implement relevant policies and measures supporting state-owned enterprise reform, “unshackle” and “reduce burdens” on enterprises, and create favorable conditions for state-owned enterprises to participate fairly in market competition.